DietGoal Innovations LLC v. Wegmans Food Markets, Inc.

Filing 230

MEMORANDUM OPINIION AND ORDER: denying 149 MOTION to Declare this Case Exceptional Pursuant to 35 U.S.C. § 285 and to Join Additional Parties to Defendants' Request Under 35 U.S.C. § 285 by Domino's Pizza, Inc. ; denying 159 MOTION for Attorney Fees (Motion for an Exceptional Case Finding Under 35 U.S.C. § 285, for Attorney's Fees, and to Join Plaintiff's Principals) by General Mills Sales, Inc.; denying 171 MOTION to Declare this Case Exceptional Pursu ant to 35 U.S.C. § 285 and to Join Additional Parties to Defendant's Request Under 35 U.S.C. § 285 by Wegmans Food Markets, Inc.; denying 173 MOTION to Declare This Case Exceptional Under to 35 U.S.C. § 285 and to Join Additional Parties by Dunkin' Brands Group, Inc. Signed by District Judge Raymond A. Jackson on 8/21/2015. (bgra)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
Norfolk Division

DIETGOAL INNOVATIONS, LEC,

"

Plaintiff,

v.

CIVIL ACTION NO. 2:13evl54

WEGMANS FOOD MARKETS, INC., ct al.,
Defendants.

MEMORANDUM OPINION & ORDER

Before the Court are Defendants Domino's Pizza. General Mills Sales. Inc.. Wegman's

Food Markets, and Dunkin Brands Group. Inc.'s Motions to Declare this Case Exceptional
Under 35 U.S.C. § 285 and to Join Additional Parties ("Motions"). ECF Nos. 149. 159. 171.
173. The Court has thoroughly reviewed the record, the parlies' briefs, and the law governing
the Motions and has determined that a hearing would not aid in the decisional process. The

Motions have been fully briefed and are now ripe for judicial adjudication. For the reasons
slated below, each motion is DENIED.
I. FACTUAL AND PROCEDURAL HISTORY

On July 1. 2013. the United States Patent and Trademark Office issued United
States Patent No. 6.585.516 (the "516 patent") entitled "Method and System for Computerized
Visual Behavior. Analysis. Training, and Planning." ECF No 2-1 at 29. The patent discloses a
manner of planning meals with an eye toward healthy eating. Plaintiff, as the exclusive licensee

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of the patent, brought this patent infringement action against Defendants and several other
entities in the United States District Court for the Eastern District of Texas.

On March 25, 2013, this case was transferred from the United States District Court for
the Eastern District of Texas to the United States District Court for the Eastern District of

Virginia. ECF No. 45.
On March 29, 2013, Defendant Wegmans Food Markets, Inc. moved to transfer the case
to the United States District Court for the Western District of New York. ECF No. 48. Plaintiff

opposed the motion, ECF No., 60, and this Court denied the motion on November 19, 2013.
On July 9, 2014, Defendants Domino's Pizza, Inc., Dunkin' Brands Group, Inc., General

Mills Sales, Inc., and Wegmans Food Markets, Inc. filed Defendants Notice of Authority
Regarding Finding of Invalidity of Asserted Patent Pursuant to 35 U.S.C. § 101. ECF No. 115.

Defendants notified the Court that by Opinion and Order in DieiGoalInnovations LLC v. Bravo
Media LLC, Case No. 13 Civ. 8391, the United States District Court for the Southern District of New

York held that the only patent at issue in this case, the 516 patent, was directed toward patent
ineligible subject matter and therefore invalid under 35 U.S.C. §101. Id. Specifically, the Court held
that, the claims of the '516 Patent recite steps that, although computer-implemented by virtue of the

patent application, could "be performed in the human mind, or by a human using a pen and paper,"
and "a method that can be performed by human thought alone is merely an abstract idea and is not
patent-eligible under § 101.'" Id. at 18.

On July 23, 2014, Defendants Domino's Pizza, Inc., Dunkin' Brands Group, Inc., and
Wegmans Food Markets Inc. filed a Joint Motion for Judgment on the Pleadings. ECF No. 118.

Defendants also filed a Memorandum in Support of their Joint Motion for Judgment on the

Pleadings, and Plaintiff filed an Opposition. ECF Nos. 119, 128. Defendants filed a Rebuttal Brief
to their Joint Motion for Judgment on the Pleadings on August 21, 2014. On October 6, 2014,

Defendants filed Notice of Supplemental Authority in Support of the Joint Motion on the Pleadings.
ECF No. 133.

On November 13, 2014, the Court received a Joint Motion for Entry of Final Judgment and
Stipulation filed by Domino's Pizza, Inc., Dunkin' Brands Group, Inc., General Mills Sales, Inc., and
Wegmans Food Markets, Inc. ECF No. 135.
On November 19, 2014, the Court entered a Stipulated Final Judgment Order. ECF No. 136.
The parties agreed that "in a related suit involving the '516 Patent, the District Court for the Southern
District of New York entered an Opinion and Order that the '516 Patent is drawn to patent-ineligible

subject matter and is invalid under 35 U.S.C. § 101." Id. Further, the Order noted that "for the
purposes of this stipulation and any resulting appeal only, the parties stipulate and agree that
DietGoal is barred by the application of collateral estoppel from continuing to assert a claim for

infringement of the '516 Patent against the Defendants. Therefore, the parties stipulate and agree to
the entry of a Stipulated Final Judgment of Invalidity based on the application of collateral estoppel
with regard to the '516 Patent." Id. The Court entered final judgment without prejudice to
DietGoal's appeal of the United States District Court for the Southern District of New York
judgment. Id. Further, DietGoal reserved its right to seek an order vacating this stipulated final
judgment if the United States Court of Appeals for the Federal Circuit or the United States Supreme

Court find that the patent is valid. Id.
On December 31, 2014, Defendant Domino's Pizza, Inc. filed a Motion to Declare this Case

Exceptional Pursuant to 35 U.S.C. § 281 and to Join Additional Parties to Defendant's Request
Under 35 U.S.C § 285. ECF No. 149. Defendant Domino's Pizza, Inc. filed a Redacted Brief in
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Support of its Motion to Declare the Case Exceptional and to Join Additional Parties to Defendants'
Request. ECF No. 150.

On January 7, 2015, Defendant General Mills Sales, Inc. filed a Motion for Attorney Fees
(Motion for an Exceptional Case Finding Under 25 U.S.C. § 285, for Attorney's Fees and to Join
Plaintiff s Principals). ECF No. 159. Defendant General Mills Sales. Inc. also filed an
accompanying Memorandum in Support. ECF No. 160. The Court received a Sealed Memorandum

in Support on January 8, 2015. ECF No. 165.
On January 14, 2015, Defendant Wegmans Food Markets, Inc. filed a Motion to Declare this
Case Exceptional Pursuant to 35 U.S.C. § 281 and to Join Additional Parties to Defendants' Request
Under 25 U.S.C. § 285. ECF No. 171. Defendant Wegmans Food Markets, Inc. filed an

accompanying Memorandum in Support of its Motion. ECF No. 172.
On January 14, 2015, Defendant Dunkin' Brands Group, Inc. filed a Motion to Declare this
Case Exceptional Under 35 U.S.C. § 285 and to Join Additional Parties. ECF No. 173. Defendant
Dunkin' Brands Group, Inc. filed an accompanying Memorandum in Support. ECF No. 174.

On January 28, 2015, Plaintiff filed a Memorandum in Opposition to Defendant Domino's
Pizza's Motion to Declare this Case Exceptional Pursuant to 35 U.S.C § 285 and to Join Additional
Parties to Defendant's Request Under 35 U.S.C. § 285. ECF No. 182.

On February 2, 2015, Plaintiff filed a Memorandum in Opposition to Defendant Wegmans
Food Markets, Inc.'s Motion to Declare this Case Exceptional Pursuant to 35 U.S.C. § 285 and to
Join Additional Parties to Defendant's Request.

ECF No. 186.

On February 3, 2015, Plaintiff filed a Sealed Memorandum in Opposition to Defendant
General Mills Sales, Inc.'s Motion for Attorney Fees (Motion for an Exceptional Case Finding Under
35 U.S.C. § 285 and to Join Plaintiffs Principals). ECF No. 187.
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On February 9, 2015, Plaintiff filed a Memorandum in Opposition to Defendant Dunkin'
Brands Inc.,'s Motion to Declare this Case Exceptional Under 35 U.S.C. § 285 and to Join Additional
Parties. ECF No. 193.

On February 12, 2015, Defendant Domino's Pizza, Inc. filed a Reply to Plaintiffs
Memorandum in Opposition to Defendant's Motion to Declare this Case Exceptional and to Join
Additional Parties to Defendant's Request Under 35 U.S.C. § 285. ECF No. 199.

On February 17, 2015, Defendant General Mills Sales, Inc. filed a Reply to Plaintiffs
Memorandum in Opposition to Defendant's Motion for an Exceptional Case Finding Under 35
U.S.C. §285 and to Join Plaintiffs Principals. ECF No. 211.

On February 20, 2015, Defendant Dunkin' Brands Group, Inc. filed a Reply to Plaintiffs
Memorandum in Opposition to Defendant's Motion to Declare This Case Exceptional Under 35
U.S.C. § 285 and to Join Additional Parties.
On April 8, 2015, the Court entered an Order Denying Defendant General Mills Sales, Inc.'s

Motion for Leave to File a Sur-Reply. ECF No. 228.
On April 8, 2015, the United States Court of Appeals for the Federal Circuit affirmed the

judgment of the United States District Court for the Southern District of New York finding that the
'516 Patent is invalid. DietGoal Innovations LLC v. Bravo Media LLC, 599 Fed.Appx. 956 (Fed.
Cir. 2015).

On April 15, 2015, the Court received Notice from Defendants of Supplemental Authority.
ECF No. 229.

The Court has considered the parties' briefs, the law of the District, Circuit, and United
States, and this matter is now ripe for judicial adjudication. For the reasons stated below, each
Motion is DENIED.

II. LEGAL STANDARD

Pursuant to Section 285 of the Patent Act, 35 U.S.C. § 285, "[t]he court in exceptional

cases may award reasonable attorney fees to the prevailing party." As the United States Supreme
Court recently held, a case is exceptional if it is "one that stands out from others with respect to
the substantive strength of a party's litigating position (considering both the governing law and

the facts of the case) or the unreasonable manner in which the case was litigated." Octane

Fitness, LLC v. ICONHealth & Fitness, Inc., 134 S.Ct. 1749, 1756 (2014). In analyzing a
motion to declare a case exceptional, district courts "may determine whether a case is
'exceptional' in the case-by-case exercise of their discretion, considering the totality of the
circumstances." Id.

The Court's analysis does not hinge on any one dispositive fact, nor does it rely on a rigid
factor-by-factor analysis. In considering relevant facts, however, "predominant factors to be
considered, though not exclusive, are those identified in Brooks Furniture [Mfg. Inc. v. Dutailier
Int'l, Inc., 393 F.3d 1378 (Fed. Cir. 2005)]: bad faith litigation, objective unreasonable positions,

inequitable conduct before the PTO, litigation misconduct, and (in the case of an accused
infringer) willful infringement." Stragent, LLC v. Intel Corp., No. 6-1 l-cv-429, 2014 WL
6756304, at *3 (E.D. Tex. Aug. 6,2014). In a recent case in the United States District Court for

the Eastern District of Texas, Judge William Bryson of the United States Court of Appeals for
the Federal Circuit further cited Octane for the proposition that there exists no exhaustive list of
factors to be considered on these exceptional case motions. See DietGoal Innovations LLC, v.
Chipotie Mexican Grill, Inc., 2:12-cv-00764, 2015 WL 1284826 (E.D. Tex. March 20, 2015)
("[I]n determining whether to award fees under a similar provision in the Copyright Act, district
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courts could consider a 'nonexclusive' list of'factors,' including 'frivolousness, motivation,

objective unreasonableness (both in the factual and legal components of the case) and the need in
particular circumstances to advance considerations of compensation and deterrence.'").
A party must prove that is a case is exceptional and therefore entitles the party to fees by
a preponderance of the evidence. Octane, 134 S.Ct. at 1758.
III. DISCUSSION

Defendants Domino's Pizza, Inc., General Mills Sales, Inc., Wegman's Food Markets,
Inc., and Dunkin' Brands, Inc. each move this Court to declare this case exceptional and award

attorney's fees. The Court briefly recount's each movant's argument and the relevant law below,
and for the reasons stated herein, each motion is DENIED.
A. Domino's Pizza

Defendant Domino's Pizza moves for an exceptional case finding for three principal
reasons: (1) Defendant argues that DietGoal's case is "Exceptionally Meritless"; (2) that

Plaintiff has litigated the case in bad faith; and (3) that under the totality of the circumstances,
this case stands out from others. Defendant also requests leave to join Plaintiffs principals and
parent company. ECF No. 150.

Domino's Pizza first argues that Plaintiff asserted a patent clearly claiming an abstract

idea. ECF No. 150 at 11. Specifically, Defendant argues that "DietGoal should have known

claimingcomputerized meal planning was unpatentable under case law pre-dating its campaign
against the good industry, and at very least after the Mayo decision, which was issued before the
parties incurred the overwhelming majority of their expenses." Id. at 13. Defendant further

posits that "DietGoal's meritless § 101 argument provides a sufficient basis for an exceptional
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case finding, and at very least contributes to the totality of the circumstances that makes the case
stand out from others." Id. Finally, Defendant argues that "it should have been abundantly clear
to DietGoal that it could not assert a patent claiming a concept as fundamental as computerized
meal planning." Id. at 11.
Defendant cites Mayo Collaborative Services v. Prometheus Laboratories, Inc., 132

S.CT. 1289 (2012) for the proposition that the '516 patent is clearly invalid. The parties agree
that the United States District Court for the Southern District of New York found that the patent
was drawn toward unpatentable subject matter and therefore invalid under 35 U.S.C. § 101.

DietGoal Innovations LLC v. Bravo Media LLC, 33 F. Supp. 3d 271, 273 (S.D.N.Y. 2014). ECF
No. 136 at 2. It is not the case, however that "the invalidation of the '516 patent warrants an

'exceptional case' finding." DietGoal Innovations LLC v. Chipotle Mexican Grill, Inc., 2015
WL 1284826 (E.D. Tex. March 20, 2015). The Supreme Court's exceptional case inquiry does

not rest on the mere fact that a party prevailed in the underlying litigation. It is true that
judgment in this case was entered based on the Southern District of New York's finding that the
'516 patent is invalid. It does not necessarily follow, however, that this is therefore an
exceptional case. Instead, Defendants must demonstrate that DietGoal's actions in this case were

somehow frivolous, objectively baseless, and well out of the ordinary. See Octane, 134 S.Ct. at
1753 (noting that fees do not constitute "a penalty for failure to win a patent infringement suit,"
and are appropriate only in "extraordinary circumstances."); IP Innovation L.L.C. v. Red Hal,
Inc., No. 2:07-cv-447 (E.D. Tex. Oct. 13, 2010) ("An award of attorneys' fees...must be
predicated upon something beyond the fact that a party has prevailed.").

First, and importantly, the '516 patent was presumed valid. See U.S.C. § 282(a);

Microsoft Corp. v. i4i Ltd. P 'ship, 131 S. Ct. 2238, 2242 (2011). Further, "[a] patent holder has

the right to vigorously enforce its presumptively valid patent." Homeland Housewares LLC v.
Sorensen Research & Dev. Trust, 581 Fed. Appx. 877, 881 (Fed. Cir. 2014). DietGoal
maintained throughout the litigation that it had a reasonable basis for believing that its subject

matter was indeed patentable. Specifically, DietGoal argues that "[a] human cannot perform in
his or her mind the function of establishing computer-implemented dietary objectives and then
generating the claimed Picture Menus displaying imagines of meals that a user can select from to

meet those objectives. These functions can only be performed by a computer." ECF No. 182 at
10. In determining whether Plaintiffs position on its patent warrants an exceptional case
finding, this Court must analyze whether that position was objectively unreasonable. It is now
beyond argument that the '516 patent is invalid. However, the record is not clear that DietGoal's

positions on its patent were at the time objectively unreasonable, or that DietGoal's infringement
theory was objectively baseless. Defendant has failed to prove by a preponderance of the
evidence that DietGoal was objectively unreasonable in relying on the presumption of validity,
and that Defendant is therefore entitled to fees.

Defendant next argues that Plaintiff has litigated this case in subjectively bad faith. ECF

No. 150 at 15. Specifically, Defendant posits that Plaintiff "found a facially broad and clearly
invalid patent in the rea of meal planning, and then sued over 70 food industry and other
companies with nutrition calculators and recipe sites." Id. The crux of Defendant's bad faith
argument is that Plaintiffs "actions from beginning to end show a bad faith strategy to assert
meritless, invalid patent to extract nuisance value settlements, capitalizing on the fact most
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defendants would rather pay a small toll to a plaintiff instead of several times as much to win a
case on the merits." Id.

Plaintiff responds that Defendant's allegations arc "nothing more than a scurrilous
fabrication." ECF No. 182 at 17. Plaintiff admits that it is a "'non practicing entity' who sued
numerous companies for infringement of the '516 Patent and collected a substantial amount of
revenue by settling many of those claims." Id.

The Court finds no evidence of bad faith. That Plaintiff has brought numerous
infringement lawsuits against several different defendants does not indicate bad faith on the part

of this patent owner. Several sister courts that regularly handle this type of patent litigation have
held that the mere fact that a patent owner brings numerous patent infringement lawsuits does
not mean that the plaintiff is acting in bad faith. See Dietgoal Innovations LLC v. Chipotle

Mexican Grill, Inc., 2015 WL 1284826 (E.D. Tex. March 20, 2015); Digitech Image Tech. LLC
v. Newegg, Inc., 2013 WL 5604283 (CD. Cal. Oct. 11, 2013); GeoTag, Inc. v. Zoosk, Inc., 2014

U.S. Dist. LEXIS 24782 at *11 (N.D. Cal. Feb. 26, 2014). The record simply does not support a
finding that Plaintiff acted either in bad faith or in a manner that was objectively baseless. As
Judge Bryson recently noted, "[i]f a party can reasonably hope for success on the merits of its

claim, it does not matter whether that party is a non-practicing entity, whether it sues numerous

defendants, or whether it settles its claims for relatively small sums. The 'exceptional case'
finding turns mainly on whether the claim is plausible or objectively baseless." DietGoal
Innovations LLC, 2015 WL 1284826 at *4.

Considering the totality of the circumstances, Defendant Domino's Pizza, Inc. has failed

to prove by a preponderance of the evidence that this case is one of the very few that deserves
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the "exceptional case" designation, and therefore an award of attorney's fees. Accordingly,
Defendant's Motion is DENIED. Domino's Pizza Inc.'s further request to add DietGoal's

principals as parties to this action is DENIED. This request is moot given the Court's ruling that
attorney's fees will not be awarded. Further, Defendants had ample time during the pendency of
this action to add additional parties, and waited until after judgment had been entered to make
the instant motion. The Court finds no meritorious reason to grant the relief Defendant now
seeks.

B. General Mills Sales, Inc.

Defendant General Mills Sales, Inc. argues that (1) Plaintiff has advanced frivolous

infringement positions; (2) Plaintiff brought this action for an improper purpose, demonstrated
by a meritless damages theory and its commission of inequitable conduct; (3) Monetary

sanctions are needed in order to deter Plaintiffs principals and outside counsel from continuing
their pattern of filing frivolous patent suits; and (4) The Court should grant leave to join
DietGoal's principals.
Plaintiff responds that (1) its infringement theory was not objectively baseless; (2) that
Defendant has not proven inequitable conduct; (3) that Plaintiffs damages theory was
objectively reasonable; and (4) that Defendant's request to add Plaintiffs principals was
untimely.
Having already ruled that Plaintiff did not advance a frivolous position and that the Court

will not grant leave to join Plaintiffs principals supra, the Court now moves to the question of
whether Plaintiff brought a meritless.damages theory and whether the Court should award
sanctions.

Defendant argues that plaintiffs damages analysis "was equally meritless as DietGoal
failed to tie its damages model to the Accused Systems, as required by controlling Federal
Circuit law." ECF No. 160 at 18. Defendant cites Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d
1292,1316 (Fed. Cir. 2011) and ResQNet.com, Inc. v. Lama, Inc., 594 F.3d 860, 869 (Fed Cir.

2010) for the proposition that the 25 percent rule of thumb (used by Plaintiff Expert Chase Perry)
is inadmissible under Daubert and the Federal Rules of Evidence, as it fails to tie a reasonable

royalty base to the facts of the case. Id. at 20.

Plaintiff counters that its expert Mr. Perry "estimated reasonable royalty damages using
the well-known 'expected value' theory, which is based on longstanding and accepted economic

principles." ECF No. 187 at 23 (citing Cybor Corp. v. Fas Techs., 138 F.3d 1448,1476 n.15

(Fed. Cir. 1998)). Further, Plaintiff posits that "Mr. Perry performed a complete Georgia-Pacific
analysis of the relevant evidence to estimate damages." Id. (citing Uniloc USA Inc. v. Microsoft
Corp., 632 F.3d at 1292).

The Court first notes that neither party has cited, and the Court has not found, any case
which predicates an exceptional case determination on the question of an expert's estimation of
damages. It is further the case that questions of whether the data sufficiently support an expert's
conclusion are generally issues which relate to the weight of the expert opinion, not its

admissibility. The Court is not prepared to rule that DietGoal's expert's damages opinion was
perfect, but it cannot rule that it alone warrants a finding that this is an exceptional case. Even
taken as one factor to consider in the totality of the circumstances, the Court does not find that
the expert's damages determination warrant's a finding that this is an exceptional case.

Defendants next move this court to award a monetary penalty against Plaintiff in order to
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"deter DietGoal's principals and BJ&C from filing future frivolous actions." ECF No. 160 at 28.
The Court finds no sanclionable conduct here. It is true as discussed supra that Plaintiff has filed

numerous patent infringement suits relating to the '516 patent against several other defendants.
However, simply requesting a monetary penalty does not advance Defendant's legal burden to

prove by a preponderance of the evidence that this is an exceptional case. The record does not

support a finding that this is an exceptional case, nor does it support an award of sanctions.
Defendant's Motion is DENIED.

C. Wegman's Food Markets

In lieu of filing its own substantive briefing on its Motion, Wegman's Food Markets joins

and incorporates the Memoranda filed by Defendant Domino's Pizza, Inc. ECF No. 172.
Therefore, for the reasons stated supra denying Domino's Pizza, Inc.'s Motion, Wegman's Food
Markets' Motion is DENIED.
D. Dunkin' Brands Inc.

Defendant Dunkin Brands, Inc. similarly argues that Plaintiff brought a baseless
infringement claim, owns an invalid patent, should have its principals joined, and that the totality
of the circumstances require a finding that this is an exceptional case. Once again, the Court
incorporates the discussion supra and after a review of the record and law Defendant's Motion is
DENIED.
IV. CONCLUSION

For the reasons stated above, Defendants Domino's Pizza, General Mills Sales, Inc.,

Wegeman's Food Markets, and Dunkin Brands Group, Inc.'s Motions to Declare this Case
Exceptional Under 35 U.S.C. § 285 and to Join Additional Parties ("Motions"). ECF Nos. 149,
13

159. 171. 173. are DENIED. The Court will not award attorney's lees and Plaintiffs principals
will not be joined. This case has consumed many hours, months, and years of time on all sides,
however, the Court is unable to find thai this case is so out of the ordinary that it should be
deemed exceptional.

The Court DIRECTS the Clerk to send a copy of this Order to all parties.
IT IS SO ORDERED.

Norfolk. Virginia

August^ .2015
Raymind A. lackson
United States District Judge

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